A membership-based business model isn’t just for gyms. Learn how businesses are using this model to make their brands about the experience, not a product or service.
What’s a Membership-Based Business Anyway?
A membership-based business model is a type of subscription service. But instead of paying for a yearly subscription to a magazine or newspaper, a member might pay a monthly or yearly fee to access products and services. Various types of businesses use memberships — for internet-based shopping services, meal plans, transportation, products, and content. The focus of the business is on customer retention more than customer acquisition. A customer that pays on a recurring basis is more valuable to a business than a customer who makes one purchase.
The consumer culture has shifted into what’s been dubbed a membership economy, where people want access more than ownership. As people place more value on experiences and engagement, they also seek to shed the burden of owning so much stuff. Business owners have been quick to seize on what consumers demand. More and more businesses have seen the benefits of the membership-based business model. Let’s dive into why.
The Benefits of Belonging: Five Perks for Business Owners
As consumers shift away from the yearning for ownership and the acquisition of more and more stuff, the value of membership is on the rise. Membership affords some tangible perks for those who opt in, and it also provides desirable abstractions like exclusivity, access, and belonging.
But the perks don’t end with the consumer. As a business model, being membership-based is maybe even more valuable for the business owner. It turns out, that giving customers what they want and doing it over and over can be quite profitable.
Here are five ways a company can flourish by offering memberships:
Recurring revenue: When you craft a membership that your customers desire and are willing to sign up for, you create a forever transaction with that customer. They don’t just pay once for a service. Instead, they pay an agreed-upon amount for an agreed-upon term for chosen services or products. This allows a business owner to more accurately and easily predict revenue. When an owner knows what’s coming in, there’s less stress and more freedom to focus on reinvestment in the business and continuing to grow and improve the products and services offered.
Customer retention: The consistency of membership creates a relationship between a business and a customer. Providing stellar customer service earns loyalty and longevity. The lifetime value of a customer is increased with membership. Finding new customers costs five times more than retaining existing customers. That’s money an owner can spend elsewhere.
Better prices: A business owner can offer better prices to members than those one-time purchasers. Predictable recurring revenue means an owner can plan for special offers, packages, promotions, discounts, and preferred pricing on regular services. The lure of better prices is an incentive for consumers to commit to a membership and creates the perception of greater value. It can also be less intimidating for a customer to pay smaller amounts over time versus a big one-time fee.
Personalized service: Another incentive for customers that translates to profits for owners is personalized service. Consumers value picking and choosing how often, what, and how much they’ll get for their membership. They have a say in the experience they wish to have and what it’s worth to them. This unique investment keeps customers coming back.
Community: Inherent in membership is belonging to a group. Everyone wants to feel they belong somewhere where they’re valued and heard. Customers who take pride in belonging to a business offer priceless feedback and loyalty, which owners can utilize for the betterment of the business.
Scissors & Scotch: Exclusively Inclusive
With our exceptional brand name, proven business model, and operational expertise, Scissors & Scotch is the perfect entrepreneurs’ franchise. Scissors & Scotch has the old-school spirit of a barbershop with a modern twist offering classic barbering services with a fully stocked bar. We want people to come in for the shave and haircut and stay for the drinks and fun. We’re about building a community where all are welcome. Everyone leaves happy, busy planning their next visit.
At Scissors & Scotch, members create a custom package, choosing the services they want and how often they wish to visit. They gain access to benefits like free upkeeps, special discounts on products, services and drinks, top-shelf liquor options, and preferred access to events. Most members choose the annual plan, a long-term commitment to looking good and staying fresh that puts a predictable chunk of change in an owner’s coffers.
A membership-based model is just one of the reasons why becoming a Scissors & Scotch franchisee is a sharp idea. Apply today to find out more.